Stampede for gas projects to help beat crisis in Qatar

Reuters are reporting that US and European oil majors are piling in with offers to help Qatar develop new gas projects, despite a protracted crisis in the Gulf region and pressure on firms to choose between Qatar and its neighbours.

Doha has seen unprecedented interest from majors as Qatar seeks to expand its gas capacity to 100 million tpy from the current 77 million to cement its position as the world’s largest exporter.

OPEC kingpin Saudi Arabia and the UAE cut ties with Doha in June, saying Qatar backed terrorism and was cosying up to rival Iran. Qatar rejected the accusation.

Reuters reported last year that Qatar’s traditional partners ExxonMobil, Royal Dutch/Shell and Total, which helped turn the country into a gas superpower, had all shown interest in new projects. The companies are also heavily present in the UAE and Saudi Arabia.

Saudi Arabia and the UAE have presented demands which, Qatar says, would amount to surrendering its sovereignty if implemented. The dialogue between the former allies has been effectively frozen over the past six months despite mediation attempts by the US.

The crisis has prompted Qatar to abandon plans to supply more gas to Saudi Arabia and the UAE. It is now looking for new markets for its LNG.

Qatar has insisted the crisis has opened new opportunities by spurring domestic industries such as construction, while competition among importers into the country is also rising. GDP is expected to rise 3.7 – 4.0% this year.

Externally, Qatar is diversifying investments which range from stakes in companies such as Volkswagen and Glencore to ownership of luxury hotels and UK shops.

Qatar was expanding investment into LNG exports out of the US where the country has a venture with Exxon for the Sabine Pass terminal, which was initially designed to import gas into the US but is now being converted into an export terminal as US gas output soars.

Despite rising exports from Qatar and rival producers such as the US and Russia, a major global gas glut was unlikely to arise as demand for gas is growing faster than for any other forms of energy.